The Case For Pacific Drilling Bonds
Artyom Zakaryan, CFA • 21 Comments
Artyom Zakaryan, CFA • 21 Comments
Thu, Sep. 29, 2:03 PM
Thu, Sep. 29, 12:46 PM
Thu, Sep. 22, 2:10 PM
Fri, Sep. 2, 2:02 PM
Mon, Aug. 29, 2:04 PM
Thu, Aug. 25, 12:27 PM
- Transocean (RIG +1.4%) is upgraded to Neutral from Sell with an $11 price target at Citigroup, which says RIG has exceeded expectations for cost reductions while the backlog remains superior to peers.
- Citi says that while RIG's EBITDA should steadily decline, the company does not face an EBITDA cliff unlike some peers, and the company also was able to issue debt which has lowered bond yields.
- Among offshore drillers, Citi rates Ensco (ESV +0.1%), Diamond Offshore Drilling (DO +0.1%), Noble Corp. (NE -0.6%), Atwood Oceanics (ATW -1.4%), Rowan (RDC -0.6%) and RIG at Neutral, while Pacific Drilling (PACD -2.7%) remains rated a Sell.
Wed, Aug. 17, 2:03 PM
Tue, Aug. 9, 2:58 PM
- Pacific Drilling (PACD -9.6%) gives up a chunk of yesterday's 28% gain as Deutsche Bank downgrades shares to Hold from Buy with a $6 price target, cut from $10.
- Despite strong cost control efforts, the firm says PACD faces increased risk of a restructuring due to looming debt maturities and weak contract coverage with only one rig fixed past April 2017.
- "Although some meaningful equity value may remain, it is difficult to quantify at this point which seems likely to serve as an overhang on the shares until a new capital structure is finalized," Deutsche Bank writes.
- However, the firm expresses confidence in PACD's long-term fundamentals because of the type of assets of the company's fleet and potential recovery in the deepwater demand.
Tue, Aug. 9, 2:00 PM
Mon, Aug. 8, 7:25 PM
- Pacific Drilling (NYSE:PACD) soared 28.6% in today's trading after reporting better than expected Q2 earnings and revenues, even as contract drilling revenue fell in the quarter primarily because the Pacific Scirocco drillship was on an 80% standby rate starting in May.
- But PACD says Total has since rescinded its request to terminate its contract with Pacific Scirocco and put the rig back to work in Nigeria.
- PACD says its operating fleet achieved average revenue efficiency of 99% during Q2, above its Q1 record high of 97.7%.
- PACD also lowered its direct rig-related daily operating expenses for four rigs to $140.1K per operating rig in Q2 from $145.8K per rig in Q1.
Mon, Aug. 8, 2:04 PM
Mon, Aug. 8, 12:50 PM
Sun, Aug. 7, 10:30 PM
Fri, Jul. 22, 2:23 PM
- Transocean (RIG -5.5%) falls more than 5% after its latest fleet status report showed it stacked an additional six rigs, taking its total number of currently stacked rigs to 28, with reduced dayrates for others.
- RIG says it won a two-year contract for one of its semi-submersibles to operate off India for ONGC at a $127K dayrate, and a newbuild ultra-deepwater rig started operations on a 10-year contract in the Gulf of Mexico at a $498K dayrate.
- Following the report, RBC's Kurt Hallead says RIG shares have limited upside until the market gains more confidence in the supply and demand outlook for floating rigs in 2017-18. Currently, fundamentals continue to weaken for floating rigs, and it remains unclear where dayrates and utilization may bottom.
- Offshore drillers are broadly lower: RIGP -1%, DO -1.5%, ESV -4.2%, RDC -5%, SDRL -1.6%, NE -4.8%, ATW -3.6%, PACD -3.8%.
Tue, Jul. 5, 7:19 PM
- Citigroup reshuffles its rankings a bit among offshore drillers in light of the wide spread in YTD performance that has seen the likes of Ensco (NYSE:ESV) and Noble Corp. (NYSE:NE) suffer sizeable losses while Diamond Offshore (NYSE:DO) and Atwood Oceanics (NYSE:ATW) sport double-digit gains.
- The firm ranks ESV at Neutral but nevertheless atop the group given its YTD underperformance (-37%) and balance sheet improvement through its April debt tender, while DO ranks second given backlog into 2019 and healthy balance sheet, and ATW is a close third as short covering could fuel further upside.
- Citi says Rowan (NYSE:RDC) has slipped to the bottom of its Neutral-rated stocks in the group on YTD outperformance (+4%), risk of contract cancellation and an EBITDA cliff in 2018; the firm continues to rate Transocean (NYSE:RIG) and Pacific Drilling (NYSE:PACD) at Sell.
Tue, Jun. 28, 3:28 PM
- Ensco (ESV +5.9%) surges after Susquehanna upgrades shares to Neutral from Negative, citing recovering crude oil prices and the stock's valuation and relative underperformance; of course, rising crude prices today also are helping.
- The firm says higher crude prices has not sparked improved demand for offshore rigs, and it could take through 2018 before any material demand potentially arises, but ESV has underperformed other offshore drillers by a wide margin and now trades below the average for offshore drillers.
- But Evercore ISI remains cautious on offshore drillers, arguing that "not a single stock screens 'cheap,'" although it prefers ESV, Noble Corp. (NE +1.2%) and Rowan (RDC +3.5%) as relative Buys for their superior fleet quality, low operating cost basis, low capex and solid backlog, while Hold-rated Ocean Rig UDW (ORIG +3.6%) and Diamond Offshore (DO +1.8%) deserve "a degree of valuation differentiation due to its highly contracted fleet in the near term."
- Also higher today: RIG +3.9%, ATW +7.1%, SDRL +2.2%, SDLP +12.3%, PACD +2.7%.